Canada’s specialty insurance market is heading into 2026 under a paradox that few executives would have predicted even two years ago: rising CAT frequency on the ground paired with improving conditions in the global reinsurance market. According to Jatinder Bassi (pictured), president of Echelon Insurance, that unusual combination is now the defining force shaping the next 12 to 18 months.
“Specialty insurance, even in 2025, is quite a challenging market,” he said. “We’re seeing a lot of capacity entering the market space, bringing with it a lot of pricing challenges. At the same time… we’re seeing an increase in environmental incidents, fire, floods, wind, hail – you name it, the Canadian market is experiencing these events.”
This, he said, will have “insurers maintaining their underwriting standards, risk management solutions and working with expert brokers.”
Last year brought the costliest catastrophe event in Canadian history, but 2025 has produced a different pattern altogether. Instead of a single major loss, the industry has been hit with a steady drumbeat of smaller, localized events. Canada is experiencing one of its highest CAT counts on record, with more than a dozen events so far, spanning fire, flood, wind and hail.
Despite the sheer number of incidents, severity has remained relatively contained. The losses are large enough to trigger activity in the first layers of insurers’ CAT programs, but not large enough to push carriers deeper into their towers or strain reinsurance structures. As a result, insurers are absorbing frequent but manageable hits rather than facing the kind of large-scale, system-wide shocks that can reshape pricing overnight.
This high-frequency, low-severity trend is now shaping expectations for 2026, influencing both domestic underwriting strategies and the tone of upcoming reinsurance renewals, Bassi said.
This dynamic – high frequency but manageable severity – is also improving reinsurer profitability, setting the stage for more favourable 2026 renewals.
From a global perspective, reinsurers have strong performance metrics supported by healthy balance sheets,” Bassi said. “That’s going to bring down pricing. It’s going to make it a soft reinsurance renewal market, which will increase capacity.”
Lower reinsurance costs translate into more deployed capacity across the specialty market, while the personal lines market remains hard. That is pushing carriers to shift more capital into specialty – adding competitive pressure.
“We’re likely going to see increased competition, increased pricing pressure, and increased limits being deployed,” he said.
With capacity flowing in and pricing softening, specialty carriers face a familiar risk: competing too aggressively in a market that isn’t growing quickly.
Bassi acknowledged the tension but said Echelon’s approach relies on discipline, not volume.
“Our focus is staying true to our technical underwriting,” he said. That includes the company’s technical risk services team – boots-on-the-ground risk assessment officers who work directly with insureds to improve engineering and reduce losses.
He describes Echelon’s positioning as highly individualized. Instead of chasing the same risks as the mainstream market, the company targets accounts that fall between the cracks.
“We’re serving the speciality space, risks that require a tailored solution,” he said. “These aren’t non-standard risks – they’re just risks that need a different lens.”
By focusing on individually rated underwriting and niche segments that don’t fit neatly into standard commercial categories, Bassi believes Echelon can maintain profitability even as competition intensifies.
While he avoids characterizing the specialty market as shrinking, Bassi notes that broader economic stagnation is limiting organic growth opportunities.
“The Canadian economy is fairly flat,” he said. “We’re not in a high-growth economic time. With that comes challenges in terms of how much availability there is.”
That puts even more emphasis on underwriting judgment, technical expertise and selecting risks that benefit from hands-on engineering support.
Taken together, Bassi sees a specialty market entering 2026 with more capacity, softer pricing, and more competition – even as CAT events continue to pile up.
It’s not a straightforward environment. But he believes disciplined carriers who stay close to the risk – literally and figuratively – are positioned to withstand the cycle.
“We want to be there for the risks that don’t fit a standard appetite,” he said.
